RE: RE: Step Back, Take a Breath There is no 1500+ tons per year supply deficit. Jeff Nielson is just as much a propagandist as the bears he is accusing. There is about 1500 tons/yr gap between the mine supply and demand, but for many years it's been covered by recycled gold, about 1600 tons or so in 2012. I am sure that recycled gold is price sensitive and the amount will decline this year to perhaps 1000 tons or so, but there is no 1500 tons deficit. And there will be no near-term impact to mine supply at this prices, one has to look at marginal at-mine costs (cash cost + sustaining capital operations), only a few marginal mines may close at $1300. If gold drops to $1000 and stays there for a prolonged period, then you'll have meaningful impact on near-term supply.
Generally, the supply/demand picture is not simple and right now it's being heavily impacted by gold being squeezed out of gold ETF's such as GLD. That's the gold supply that the paper market can directly influence. They dumped about 600 tons this year, that's a huge amount to absorb in a short time. The good news is that this source of supply is limited, they may squeeze out another 200-300 tons but that's about it. But until gold-buying season restarts in India in Aug/Sept, my guess is that gold will remain under pressure and may indeed push down to $1000 for a short time. Once the ETF's impact is exhausted, the gold will have to move to reflect the true costs and supply/demand, probably $1500 or so.